Real Property

A Section of the Virginia State Bar.

Meeting Minutes - September 24, 2004

Minutes of the Virginia State Bar
Real Property Section
Board of Governors

Charlottesville, Virginia

The Autumn Meeting of the Board of Governors of the Real Property Section of the Virginia State Bar, with Area Representatives in attendance and participating in the meeting, was held at the offices of Virginia CLE in Charlottesville, Virginia on Friday, September 24, 2004.

L. McElwain called the meeting to order at 10:00 a.m., and made welcoming remarks and had all attendees introduce themselves.

The minutes of the meeting for the Summer meeting held at Virginia Beach, Virginia on June 18, 2004, were prepared by D. Dewing, but were not available for approval and will be approved at the next meeting of the Section.

A discussion of the finances of the Section was passed over in order to first discuss the status of planning for the 9th Advanced Real Estate Seminar that has been scheduled to take place in two half day sessions at Kingsmill in Williamsburg on February 25 and 26, 2005 for continuing legal education credits of eight hours including credits for two hours for Ethics. L. McElwain said at least one hundred attendees would be required in order to make the seminar economically viable from the sponsor Virginia CLE's perspective. He also pointed out that the traditional Winter meeting of the Section, scheduled for some date in January, was very close in time to the dates when the Advanced Real Estate seminar would be held and asked the opinion of those present as to whether the spring Section meeting should be held just before or after the times scheduled for the Advanced Real Estate seminar or held at a later date. It was the consensus of those present that the Spring Section meeting should be held either immediately before or after the dates on when the Advanced Real Estate seminar would be held.

G. McMullan, who had been involved with other members of the Section in planning for the seminar, then reviewed with those present the tentative schedule of topics and speakers and asked their opinion as to whether they considered the topics and speakers obtained so far created a seminar that would attract real estate lawyers. The consensus was that what had been scheduled so far was attractive.

G. McMullan then requested opinions from those persons at the meeting as to what they would consider additional attractive topics to be presented at the seminar. The suggestions made are as follows:

1. C. Meier stated that it was her opinion, as a lawyer who practiced real estate law primarily in the area of residential real estate and had been doing so for over fifteen years, that those persons practicing in the residential real estate area were probably going to be lawyers who had mastered most of the basic and intermediate issues concerning residential real estate law, and to attract them to the seminar, there would have to be topics of a more sophisticated nature related to their practices. She made the suggestion that a litigation component related to residential real estate disputes including brokerage disputes might be an attractive topic. She suggested further that the component as to litigation and solutions to litigation issues should be one that is fast paced with multiple situations and the solutions to such situations being presented by litigation-experienced lawyers. C. Meier's comments were supported by other attendees at the meeting, as were the following suggestions:

2. C. Erdman suggested that there be a construction law component to the seminar.

3. L. Schonberger suggested that there be part of the seminar that would address what remedies are available when an intended real estate transaction dissolves into a situation where one party or the other to the transaction refuses to perform, such as the remedy of specific performance. He also thought that suggestions as how to avoid situations where parties to a contract might get into disputes, and what lawyers should do when such disputes arise, would be an attractive topic.

4. P. Bellegarde suggested that as an adjunct to any discussions about disputes arising as to what was intended by a real estate contract or what was omitted from it that a presentation on mediation or alternative dispute resolution would be an attractive draw for the seminar.

5. C. Meier and P. Bellegarde both pointed out that different forms for a real estate transfer contract were being used in Tidewater as opposed to northern Virginia and probably were ones that differed from what was being used in other parts of Virginia. They thought that it might be an attractive topic to have speakers address the differences between the various "standard" forms and how those differences should be handled in real estate contract negotiations and closings.

6. M. Williamson pointed out that methods, some controversial and some not controversial, were being used among the Bar for effecting savings on recording taxes and suggested that this might be a good topic.

7. C. Traver recalled that he had read a case whereby a lawyer handling a real estate closing was successfully sued in a malpractice case in which a bank, that had received a real estate escrow deposit from the lawyer, had been taken over by the FDIC in such a way that the deposit was lost. C. Traver suggested that this unfortunate incident might be a good topic for the ethics part of the seminar. C. Traver also suggested that the residential real estate component of the seminar be entitled "Advanced Residential Real Estate Law Topics" or some similar designation.

L. McElwain next stated that the 23rd Annual Real Estate Practice Seminar was scheduled to take place on the following dates at the following locations: May 3, 2005 at Richmond Marriott in Richmond, May 4, 2005 at the Roanoke Wyndham in Roanoke, May 10, 2005 at the Holiday Inn Select in Norfolk, and May 12, 2005 at the Waterford at Fair Oaks in Fairfax. The annual Summer seminar is scheduled to take place at the Summer State Bar meeting in Virginia Beach on June 18 at the Holiday Inn-Sunspree Hotel, where a seminar will be presented in conjunction with the State Bar Environmental Section.

L. McElwain next discussed the Section's finances by pointing out that the budgeted gross income for the Section was approximately $38,900 for the current fiscal year 2005 (from July 1, 2004 through June 30, 2005). This anticipated income was based on a membership of 1,945 members paying their annual dues for membership in the Section at $20 apiece; however, when this income had subtracted from it a 20% rate due to what is anticipated to be for those members who did not send in their dues payments, the income that could be relied upon dropped to just over $31,000. L. McElwain did point out that the 20% rate was suspect in his opinion, if in fact it was for non-paying members, since the Section already has received as of May 31, 2004, the sum of $37,830, which is more than the anticipated net income sum, which would indicate that the 20% loss percentage is too high. L. McElwain said that he would check further as to the exact reasons why this percentage was being subtracted from the gross receipts of the Section.

L. McElwain next informed the attendees at the meeting that due to an overrun of expenses from Fiscal Year 2004, approximately $1,000 would be taken from the income due the Section for Fiscal Year 2005 for application against the Fiscal Year 2004 expense overrun. At this point in the meeting, L. McElwain invited a discussion as to how the expenditures of the Section could be better kept in line with its income.

In order to begin the discussion as to the Section's finances, L. McElwain said that the biggest cost to the Section was its publication of the Fee Simple, which cost over $13,000 to print the May, 2004 issue. He said that if the publications were kept to no greater than 100 pages, the Section could save between $6,000 and $7,000 per year. In discussing the other expenses of the Section, he also said that the salaries to persons responsible for organizing the publication were minimal since Lynda Butler charged nothing to assist with this chore, nor did advisors to the Fee Simple such as C. Traver, and indeed the only compensation was for the services of Felicia Burton. L. McElwain said that the only luxury benefiting the Governors, officers, and Area Representatives who worked for the Section was the free dinner at Steinhilbers after the Summer Section seminar at Virginia Beach.

Finally, L. McElwain pointed out that in past years surpluses had occurred, but the requirement of the Bar authorities was that this surplus be "returned" to the Bar to be placed in its General Fund, so that the Section started each year with no surplus. Therefore, when the Section had surplus funds at the end of a fiscal year, this surplus was, on occasion, exchanged for services from Virginia CLE, which tended to reduce the surplus to zero.

Having been presented with the facts recited, L. Schonberger suggested that the Section (a) consider limiting the size of the Fee Simple to 100 pages or less for its autumn publication and determine on the basis of where the budget stood during the winter whether also to limit the spring edition of the Fee Simple, and (b)consider raising its annual dues. Insofar as the annual dues were concerned, L. McElwain replied as an additional fact to be considered, that the Bar allowed annual dues to be as high as $35 per member, that the highest charging Section of the Bar was the Tax Section, which charged $25 per member, and that the Real Estate Section was the second highest charging Section as $20 per member.

C. Traver pointed out that upon a review of recent past sizes for the Fee Simple, they ranged in size from up to 273 pages to less than 100 pages, and that therefore it would not be difficult to keep the Fee Simple, when necessary, below 100 pages.

Further discussions were held as to an idea to place the Fee Simple on a CD for delivery to all of the Section's members, which D. Dewing said would result in some, but not significant, savings to the Section. He pointed out that the entire Fee Simple could be published on the Section's web site to anyone who wished to read the Fee Simple, whether they were members of the Section or not members of the Section. He pointed out that the site had approximately 2,200 visits during the last recording period, with many of the visits lasting a significant period of time.

Thereafter, other attendees at the meeting questioned the wisdom of putting the Fee Simple on the open web site of the Section (i.e., not requiring members access only), since doing so might lessen the desire of lawyers wishing to benefit from the Fee Simple's articles to pay to join the Section. L. McElwain stated, in answer to a question from D. Dewing, that there seemed to be no drop off in membership when the dues were raised several years ago from $15 to $20. C. Erdman noted that he was against having free access to the Fee Simple, since he considered it provided an edge to his real estate knowledge to be able to access the Fee Simple without having every person, whether lawyer or non-lawyer, being able to access it. C. Erdman also expressed his opinion that for his firm and other small law firms similar to his firm, it was an imposition to have to pay a $5.00 additional charge to belong to the Section; especially since various members of his firm wished to belong to more than one Bar Section.

Other members thought differently about the issue. R. Howard thought that access to the Fee Simple was generally widespread and available to members of the Section and non-members as well, since it was often made available to the public in various reception areas of many law firms.

E. Zimmerman supported the idea of putting the Fee Simple on the Section's web site, but also recommended that the Section continue printing a hard copy of the Fee Simple for reference purposes. G. McMullan said that he seldom read the articles in the Fee Simple except as a reference to work in which he was involved in at the time he read the article and used the Fee Simple primarily as a valuable reference source. C. Traver agreed with G. McMullan that this usage was typical for many Section members, so that a hard copy being available was of real value. E. Zimmerman's preference for continuing to have a hard copy of the Fee Simple received general support among the meeting attendees, including M. Williamson and C. Meier, who expressed their support in other comments concerning the value of having a hard copy available. 10-05-04:

C. Meier also suggested that one way to keep the Fee Simple to under 100 pages would be to not publish with each Fee Simple the long list of who are the officers, Governors, and Area Representatives of the Section, and to be more careful as to the publication's overall lay out and design so that the printing costs could be reduced. She suggested that the autumn edition of the Fee Simple be limited to 100 pages or less and that the spring edition should be limited to 200 pr less pages, with the list of committees and other persons running the Section or representing the Section's areas be only published once each year. C. Traver stated that he would be willing to assist in reviewing the layout and design of the Fee Simple in order to reduce its printing costs.

A motion was then made by C. Meier, which was seconded by P. Williams, and which passed by voice vote among the attendees, that the Fee Simple be limited to 100 pages or less as to its autumn edition, to 200 or less pages for its Spring edition, and that the printing of who were the officers, governors, and Area Representatives be limited to the just one of the annual publications.

Thereafter, a vote as to what should be done regarding placing the Fee Simple on an unrestricted part of the Section's web site was deferred until such time as D. Dewing could provide a cost estimate for bringing the Fee Simple on line within the Section's web site for general public access.

The general discussion of costs continued, and G. McMullan said that at least the Section, which allowed those that worked for and ran the Section to attend without cost the dinner at Steinhilbers, should not allow other persons to attend without paying for their drinks and dinner.

L. Schonberger, on motion that was seconded and unanimously approved, caused a resolution to be passed to the effect that it be announced to the attendees of the Summer seminar and before the Steinhilbers dinner that all persons who were not officers, governors, and Area Representatives identify themselves so that they could be charged for their attending the dinner.

L. McElwain then said that it was the prerogative of the board of governors of the Section to determine if the dues should be increased, and that if an affirmative vote to increase the dues from $20 to $25 were passed it would not be passed until voted on by the actual board and thereafter the recommendation or motion of the board would have to be approved by the State Bar Council (the governing body of the entire Virginia State Bar) at its summer meeting in June 2005. Since this approval would not occur until June, and since the Real Estate Section's members must receive adequate notice of the dues increase before the dues notices are sent out in June, it was likely that the actual increase would not be effective until Fiscal Year 2007. L. McElwain said that he would confirm this delay in increasing the dues and would determine if the increase could be accelerated to Fiscal Year 2006.
Thereafter various Committee Reports were heard as follows:

L. Schonberg described how the Writing Contest was to work and its status. The meeting attendees discussed the merits of having the winning contestants be allowed to publish their articles in the Fee Simple, and that the $1,000 award money was a reasonable sum, which should be divided among the winner and the 2nd and 3rd place article writers in proportions of $500 for 1st place, $300 for 2nd place, and $200 for third place. Some concerns were raised as to the number of articles that might be submitted and their overall quality, but the consensus was that there was sufficient incentive to prepare articles due to the prize money and the recognition that would come from being published. Also the program would encourage participants in that every participant would receive a free one year membership in the Section.

E. Zimmerman on motion seconded by C. Erdman, moved that the program be presented to the Bar Council for final approval, and this motion was approved.

At this point in the meeting, E. Zimmerman was asked to form an ad hoc committee to create a mission statement for the Section.

D. Dewing reported for the Technology Committee by announcing that it is now possible to obtain vital statistics from the Virginia Department of Health on line unless the birth certificate is less than 100 years old and other on line developments, such as reasonably priced security, which is being developed for small and medium law firms as to their computer communications, and a report on the latest articles relating to emailing and general information concerning computers, which report is appended to these minutes.

L. McElwain then suggested as an idea to make the budget more accurate that the travel vouchers for members attending the Section meetings be standardized so that persons coming from various parts of the State receive a flat fee for their travels depending on where they were traveling to and from to attend. C. Meier worried that this fixed sum might encourage inaccurate reporting as to travel distances, and C. Traver stated that such an idea would be prohibited by the Bar Council since its requirements were that accurate mileage be reported. The idea was then discarded.

Upcoming articles and ideas for Fee Simple articles were then discussed.

R. Howard said that he thought an appropriate article might be on underwriting title insurance in a slowing economy.

G. McMullan said that he and L. Davis would prepare an article for the autumn Fee Simple on determination of what law controlled as to personal property for attachment and perfection purposes under the Uniform Commercial Code as to Virginia transactions.

C. Meier thought that an appropriate article might deal with computer backup systems for small firms as to real estate transactions, and Lem Marshall might be able to send in an article as to when should real estate agents should turn over the keys to a dwelling during the closing process.

R. Chess suggested that he and R. Kaplan might be able to prepare an article on private placement memoranda in real estate syndications.

E. Zimmerman thought that it might be timely to have an article published as to time of the essence issues, and that he knew a lawyer who had recently researched the law on rights of way and road issues. In conjunction to E. Zimmerman's idea, L. Davis said that an issue very prevalent in western Virginia was the issue of what to do from a title standpoint as to railroads that had their rights of way running under roads and buildings.

L. McElwain requested that a meeting of just the Governors take place immediately following the general meeting.

Thereafter, on motion by C. Erdman, which motion was duly seconded by P. Sellers, and unanimously passed, the meeting was adjourned.

Respectfully Submitted,

C. Grice McMullan, Jr.

Secretary

AGENDA
FALL MEETING OF THE BOARD OF GOVERNORS OF
THE REAL PROPERTY SECTION OF
THE VIRGINIA STATE BAR

Notes: The past two years this Section has exceeded its budget. After presentation of the Financial Report there will be a discussion regarding ways to ensure that the Section will stay within the confines of this fiscal year's budget. New Business will include setting a time and place for the Spring meeting (The Advanced Seminar will be held in late February, barely one month from the Mid-year meeting). Committee reports should include the status of Fee Simple articles.